COMBATING MONEY LAUNDERING, TERRORIST FINANCING,

AND COUNTERFEITING ACT OF 2017

Senators Chuck Grassley and Dianne Feinstein

Section-by-Section Summary

SECTION 1 SHORT TITLE, TABLE OF CONTENTS

This section designates the Act as the Combating Money Laundering, Terrorist
Financing, and Counterfeiting Act of 2017.
SECTION 2 TRANSPORTATION OR TRANSHIPMENT OF BLANK CHECKS IN
BEARER FORM
Current law requires an individual transporting monetary instruments with an aggregate
value exceeding $10,000 into or out of the United States to file a report with Customs and Border
Protection. However, the law does not specify how to value a check for reporting purposes when
the dollar amount is left blank. Section 2 would make clear that monetary instruments with the
dollar amount left blank are to be valued in excess of $10,000 for reporting purposes, if the
instrument is drawn on an account containing more than $10,000.
SECTION 3 INCREASING PENALTIES FOR BULK CASH SMUGGLING
Bulk cash smuggling is the knowing concealment of more than $10,000 in currency or
monetary instruments from a place within the United States to a place outside the United States
(or vice versa) for the purpose of evading the cross-border currency and monetary instrument
reporting requirements. It is a widely used method for transporting illegal proceeds between the
United States and Mexico. Under the bulk cash smuggling statute, 31 U.S.C. 5332(b)(1), the
maximum penalty for a violation of the statute is a term of imprisonment of five years. Section 3
is designed to further deter these crimes by increasing the maximum term of imprisonment to ten
years.
In addition, Section 3 would add a criminal fine provision to the bulk cash smuggling
statute that would bring it into conformity with other statutes supporting criminal enforcement of
the currency reporting requirements. See 31 U.S.C. 5322(a)-(b) & 5324(d). As such, Section
3 would provide for an enhanced fine in cases where the defendant violates another federal law
in addition to the bulk cash smuggling statute, or engages in a pattern of unlawful activity.
SECTION 4 SECTION 1957 VIOLATIONS INVOLVING COMMINGLED FUNDS
AND AGGREGATED TRANSACTIONS
18 U.S.C. 1957 is an important tool in combating money laundering because it applies
to the transfer of criminal proceeds, or dirty money, without the need to demonstrate an intent
on the part of the defendant to conceal the money, promote criminal activity, or evade a reporting
requirement. However, ambiguity in two scenarios has enabled human and drug traffickers to
evade prosecution. First, courts have disagreed over whether the statute applies to the
withdrawal of money from an account in which both dirty and clean money are commingled.
Second, it is also unclear under the statute whether the government may aggregate a series of
closely related sub-$10,000 transactions to meet the $10,000 threshold when defendants structure
their transactions to evade it.
Section 4 closes the first loophole by clarifying that the withdrawal of funds in excess of
$10,000 from an account containing more than $10,000 in criminal proceeds commingled with
other funds is a transaction involving more than $10,000 in criminally derived property. It closes
the second loophole by allowing for the aggregation of individual transactions that are closely
related in time, the identity of the parties, the nature of the transactions, or the manner in which
they are conducted, to meet the $10,000 threshold.
The issue of commingled funds is especially problematic along the Southwest border,
where human and drug traffickers are able to circumvent these money laundering laws by
commingling illegal proceeds with the proceeds of legitimate businesses. The provisions in
Section 4 ensure that international drug and human traffickers cannot evade the strictures of
section 1957 in these ways.
SECTION 5 CHARGING MONEY LAUNDERING AS A COURSE OF CONDUCT
Currently, in most federal judicial circuits, the government is not permitted to charge a
defendant who engages in a series of related money laundering offenses with a single violation
of the statute that encompasses the entire course of conduct; instead, each transaction must be
charged as a separate count in the indictment. Section 5 would provide the government with the
simpler and more practical option of charging a defendant with a single count, thereby allowing
money laundering to be charged in the same manner as mail fraud under 18 U.S.C. 1341. The
section also would include conspiracies to violate 18 U.S.C. 1960 (prohibition of unlicensed
money transmitting businesses) as money laundering conspiracies under 18 U.S.C. 1956(h).
SECTION 6 ILLEGAL MONEY SERVICES BUSINESSES
Illegal money services businesses are entities used to send criminal proceeds abroad, as
well as to send clean funds abroad to promote ongoing or future criminal activity there.
Section 6 would make a conforming change to 18 U.S.C. 1960(b)(1)(B) to clarify that the same
general intent requirement found in 1960(b)(1)(A) applies to both of these provisions of the
statute. Under both provisions, specific knowledge of the requirement to register is unnecessary.
In addition, the Department of the Treasury has replaced the term money transmitting business
with money services business in applicable regulations because some entities covered by the
term, such as check cashiers, do not transmit money. Section 6 would make related conforming
and technical changes to Section 1960 to reflect this new nomenclature. Finally, the section
would also increase penalties and fines for significant violations of the statute.
SECTION 7 CONCEALMENT MONEY LAUNDERING
A key strategy employed by many international drug organizations to move money
illegally is to hire couriers, or mules, from outside the organization whose only job is to accept
delivery of cash from a stranger, transport it across an international border, and deliver it to

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another stranger. The courier knows nothing about the drug organization and can provide little to
no information to law enforcement if intercepted before the border. However, the courier
typically knows that he is transporting concealed drug proceeds and is playing an important role
in money laundering.
Section 7 would address the Supreme Courts recent interpretation of a portion of the
concealment money laundering statute, 18 U.S.C. 1956(a)(2)(B)(i), that has effectively
neutralized this law enforcement tool against couriers. In Cuellar v. United States, 553 U.S. 550
(2008), the Court construed the statute to require the government to prove not only that the
defendant knew his cross-border transportation would have had the effect of concealing or
disguising one of the five statutory attributes of criminal proceeds (nature, location, source,
ownership or control), but also that he knew the transportation had been specifically designed for
that effect. In other words, the Court held, under the statute the government could not rely on
proof that the defendant knew the proceeds were transported clandestinely, it needed also to
prove that the defendant knew precisely why the proceeds were so transported. This is
knowledge that couriers typically do not possess.
The Courts analysis suggested that had the statute simply read knowing that such
transportation conceals or disguises, instead of knowing that it was designed to conceal or
disguise, the conviction would have been upheld. Therefore, Section 7 replaces the words
designed . . . to conceal or disguise with conceals or disguises. 1 Because identical language
appears in 18 U.S.C. 1956(a)(1)(B), the section amends that provision as well.
Section 7 also clarifies an internal inconsistency relating to a separate knowledge
requirement in the statute. 18 U.S.C. 1956(a)(2)(B), as informed by the definition in
1956(c)(1), provides that a defendant must know that the property involved in the money
laundering transaction is the proceeds of some form of unlawful activity, but not a specific form.
However, 18 U.S.C. 1956(a)(2)(B)(i) appears to require the government to prove more that
the defendant knew that the purpose of the transaction was to conceal or disguise the proceeds of
specified unlawful activity. Most courts hold that the former provision controls, but Section 7
removes the conflicting language, which also appears in 1956(a)(1)(B)(i), as well.
Enactment of these reforms will restore a crucial weapon in combating the transportation
of large amounts of criminally derived cash across our borders.
SECTION 8 FREEZING BANK ACCOUNTS OF PERSONS ARRESTED FOR THE
MOVEMENT OF MONEY ACROSS INTERNATIONAL BORDERS
Section 8 would address the problem of criminal proceeds being quickly removed from
certain defendants accounts following an arrest. This section would permit the government to
obtain a 30-day order freezing any accounts held by a person arrested for offenses involving the

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In addition, to demonstrate a violation of the statute, the government would continue to have to prove that a
defendant (1) attempted or completed an international transfer of funds and (2) knew that the funds represented the
proceeds of some form of unlawful activity.

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movement of funds in or out of the United States. This temporary measure will allow the
government time to determine whether funds in those accounts are subject to forfeiture in
connection with the criminal offenses at issue.
SECTION 9 PROHIBITING MONEY LAUNDERING THROUGH HAWALAS,
OTHER INFORMAL VALUE TRANSFER SYSTEMS, AND CLOSELY RELATED
TRANSACTIONS
Under 1956(a)(1) and 1957, a financial transaction or a monetary transaction
constitutes a money laundering offense only if the funds involved in the transaction represent the
proceeds of a criminal offense. There is some uncertainty, however, as to whether the proceeds
element is satisfied as to all aspects of a money laundering scheme when two or more
transactions are committed in parallel. For example, if A sends drug proceeds to B, who deposits
the proceeds in Bank Account 1, and simultaneously, B takes an equal amount of money from
Bank Account 2 and sends it to A or a person designated by A, there is some question about
whether the second transaction meets the proceeds element. This question has become
increasingly important, because parallel transactions are used to launder funds through hawalas
and other informal systems often used by terrorists and international drug traffickers.
In 2006, Congress addressed this concern by clarifying that for purposes of 1956, a
financial transaction includes proceeds of specified unlawful activity if it is part of a set of
parallel or dependent transactions, any one of which involves the proceeds of specified unlawful
activity, and all of which are part of a single plan or arrangement that involves such proceeds.
Section 9 would extend this clarification to monetary transactions under 1957.
SECTION 10 RESTORING WIRETAP AUTHORITY FOR CERTAIN MONEY
LAUNDERING AND COUNTERFEITING OFFENSES
Section 10 would eliminate a current gap in the Wiretap Act, 18 U.S.C. 2510-2522,
that was created by a legislative oversight. It would restore the governments ability to obtain
wiretap authority for currency reporting, bulk cash smuggling, illegal money services businesses,
and counterfeiting offenses.
SECTION 11 APPLYING THE INTERNATIONAL MONEY LAUNDERING
STATUTE TO TAX EVASION
The problem of individuals using foreign bank accounts to avoid paying U.S. taxes is
well established. Section 11 would enable the government to target those individuals, including
international drug dealers who seek to move funds to offshore banking centers, by making it a
money laundering violation to transfer funds into or out of the United States with the intent to
violate U.S. income tax laws.
SECTION 12 CONDUCT IN AID OF COUNTERFEITING
Current law prohibits the possession of cover plates, stones, and other devices that may
be used to counterfeit U.S. currency and securities. However, new technology has produced new
security features, such as holograms, used to protect against counterfeiting. Section 12 would

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update the current counterfeiting laws by including any materials, tools, or machinery that may
be used to counterfeit U.S. or foreign money. It would also strengthen security features by
making illegal the possession of material or other things similar to security features.
This section also addresses another common counterfeiting tactic known as bleaching.
Bleaching involves removing images from lower denominations of currency allowing for the
printing of higher denominations on genuine paper. This particular scheme is becoming
international in scope, with the Secret Service identifying bleached operations in Columbia,
Nigeria, Italy and North Korea. This section would prohibit the possession of any paper or
security features, including bleached paper, often used to produce counterfeit U.S. money by
criminals abroad.
SECTION 13 PREPAID ACCESS DEVICES, STORED VALUE CARDS, DIGITAL
CURRENCIES, AND OTHER SIMILAR INSTRUMENTS
Certain monetary instruments, referred to in Department of the Treasury regulations as
prepaid access devices, and often referred to as stored value cards, are increasingly becoming
effective mediums for criminals to hide and move funds across the border because they are more
easily concealable than cash, and they are not covered by reporting requirements. Section 13
would amend 31 U.S.C. 5312 to include funds stored in a digital format within the definition of
monetary instruments. This would effectively subject those devices to anti-money laundering
reporting requirements under the Bank Secrecy Act, in cases where the value stored is above
$10,000.
Section 13 would also mandate two reports: (1) a GAO report on the impact of the
amendments on law enforcement and the prepaid access industry; and (2) a Department of
Homeland Security/Customs and Border Protection report detailing a strategy to detect prepaid
access devices and digital currency at border crossings and ports of entry.
SECTION 14 ADMINISTRATIVE SUBPOENAS FOR MONEY LAUNDERING
CASES
Section 14 would amend 18 U.S.C. 3486 to expand the availability of administrative
subpoenas for criminal investigations involving money laundering activities, activities of illegal
money services businesses, and activities aimed at avoiding certain currency transaction
reporting requirements (import or export of monetary instruments, structuring deposits, bulk cash
smuggling, etc.). These records are typically obtained through the issuance of grand jury
subpoenas, but law enforcement occasionally needs the speed and flexibility of administrative
subpoenas. This section would also authorize administrative subpoenas for investigations which
would constitute a money laundering offense against a foreign nation.
In addition, currently, a U.S. district court may issue a non-disclosure order for an
administrative subpoena if such a disclosure would result in: (1) endangerment to the life or
physical safety of a person; (2) flight to avoid prosecution; (3) destruction of or tampering with
evidence; or (4) intimidation of potential witnesses. Section 14 also adds another scenario
justifying a non-disclosure order: if disclosure would result in the destruction, transfer, damage

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or otherwise unavailability of property that may become subject to forfeiture or a foreign nation
forfeiture judgment.
SECTION 15 OBTAINING FOREIGN BANK RECORDS FROM BANKS WITH U.S.
CORRESPONDENT ACCOUNTS
Foreign bank records can be critical evidence in money laundering prosecutions. Yet
foreign bank secrecy laws often pose a major obstacle for U.S. investigators, even though under
current international agreements and standards, this should not be the case. Under current U.S.
law, the government can obtain bank or business records from foreign banks by serving
subpoenas on branches of the bank or business with correspondent accounts located in the United
States. See 31 U.S.C. 5318(k). However, many foreign governments object to these
subpoenas, and as a result, use of this authority is carefully weighed, and must be approved by
the Department of Justices Office of International Affairs.
Despite the existence of this authority, obtaining these records as legally admissible
evidence in U.S. courts can still result in protracted negotiation and litigation. During a terrorism
prosecution in which the government invoked this law to attempt to obtain bank records in the
Kingdom of Saudi Arabia, numerous deficiencies with it were identified. Section 15 would
alleviate many of these deficiencies by requiring that the foreign bank produce certified records
so they can be used as evidence; prohibiting the foreign bank from disclosing the existence of the
subpoena; authorizing the government to seek contempt for non-compliance with the subpoena;
and allowing the government to seek civil penalties against a U.S. financial institution if it does
not terminate its correspondent relationship with a foreign bank (as the law currently requires) if
the foreign bank does not comply with or successfully challenge the subpoena.
In short, Section 15 would strengthen this existing investigative tool, and put foreign
banks on notice that foreign secrecy or confidentiality laws may not be used to impede U.S. law
enforcement efforts to investigate money laundering offenses for which the United States has
jurisdiction.
SECTION 16 DANGER PAY ALLOWANCE
Current law provides for danger pay allowance for agents of the Drug Enforcement
Administration, Federal Bureau of Investigation, U.S. Marshals, and the Bureau of Alcohol,
Tobacco, and Firearms who serve in designated dangerous posts abroad. Section 16 would
expand the availability of danger pay allowance to agents employed by Immigration and
Customs Enforcement, Customs and Border Protection, and the Secret Service, recognizing that
agents of these law enforcement services within the Department of Homeland Security should be
treated equally with law enforcement agents within the Department of Justice.
SECTION 17 CLARIFICATION OF SECRET SERVICE AUTHORITY TO
INVESTIGATE MONEY LAUNDERING
The Secret Service is authorized by 18 U.S.C. 3056 to investigate a broad range of
financial crimes. The Department of Justice has interpreted this statutory language as extending
to money laundering investigations. Likewise, the Secretary of the Department of Homeland

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Security has specifically delegated the responsibility for investigating money laundering to the
Secret Service. Section 17 would expressly clarify that the Secret Service has the jurisdiction to
pursue money laundering investigations.
Additionally, Section 17 would permit the Secret Service to investigate unlawful activity
against any financial institution as defined in the law, removing the previous qualifier that the
institution be federally insured. This last change reflects the growing trend by criminals to
facilitate money laundering through transactions by non-traditional financial institutions, such as
check-cashing businesses.
SECTION 18 PROHIBITION ON CONCEALMENT OF OWNERSHIP OF ACCOUNT
In order to gain access to the U.S. financial system, criminals, including foreign
kleptocrats, will often conceal their identities from financial institutions when opening an
account. This can be done using third-party money launderers, gatekeepers, nominee owners, or
corporate vehicles such as shell and front companies. Once established, criminals can use these
accounts to conceal the source or nature of illicit funds or conduct transactions with few
impediments and without detection by the financial institution. At the same time, concealing
account ownership information prevents a financial institution from complying with know your
customer requirements designed to combat money laundering and terrorist financing.
Currently, there is no criminal offense with which to prosecute an individual who opens
an account under false pretenses but otherwise causes no direct financial harm to the financial
institution. Section 18 would remedy that omission by making it an offense for an individual to
knowingly conceal, falsify or misrepresent, from or to a financial institution, a fact concerning
the ownership or control of an account or assets held in an account. The section narrowly
defines a financial institution to include only those institutions that are under strong obligations
to identify their customers pursuant to the Bank Secrecy Act. The offense would be consistent
with and modeled on 31 U.S.C. 5324 and 5332, which also make it an offense for an
individual to evade certain Bank Secrecy Act obligations.
SECTION 19 PROHIBITION ON CONCEALMENT OF SOURCE OF ASSETS IN
MONETARY TRANSACTION
An entity identified as a primary money laundering concern under section 311 of the
USA PATRIOT Act is one that the Department of Treasury has determined is a money
laundering or terrorist financing risk to the U.S. financial system. A foreign politically exposed
person, or PEP is a foreign individual with a prominent public function who presents a risk
for involvement in bribery and corruption because of their position and influence. Both 311
entities and foreign PEPs pose risks to U.S. financial institutions covered by the Bank Secrecy
Act because of the potential for money laundering and other illicit financial activity.
Following Department of Treasury requirements, U.S. financial institutions must use
increased due diligence to stop 311 entities from accessing the U.S. financial system. In the case
of foreign PEPs, the law obligates U.S. financial institutions to use enhanced due diligence to
protect against misuse of the U.S. financial system to launder corrupt money. However, when

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facts concerning the involvement of a 311 entity or a foreign PEP in a monetary transaction are
concealed, falsified, or misrepresented to a U.S. financial institution, it can prevent compliance
with the Bank Secrecy Act and result in the institution unwittingly facilitating money laundering.
Prosecutors do not have an offense to charge against an individual who conceals, falsifies
or misrepresents the involvement of a 311 entity or foreign PEP in a monetary transaction that is
by, through, or to a U.S. financial institution. Section 19 closes this gap and would enable the
government to pursue any such individuals and their assets. The proposed offense is consistent
with and modeled on 31 U.S.C. 5324 and 5332.
SECTION 20 RULE OF CONSTRUCTION
Section 20 would clarify that nothing in the legislation shall be construed to apply to the
authorized law enforcement, protective, or intelligence activities of the U.S. or of a U.S.
intelligence agency.